What Will be My Budget for Ads?

What will be my budget for ads?

This is the most asked question during my discovery calls.

I am always surprised by this question.

Why?

Every successful company has a pre-decided budget for their marketing (most of the time).

Different experts explained how to set the budget for ads but mostly we are getting people who don't have faith that these ads are going to work for them.

So they don't want to spend more but still, with a confused mind, they want to give it a try.

I always suggest to them that this is the thing that they need to decide. Nobody can decide this for their business.

Just example with a lower product/service, you don't need to have much budget for ad spend.

But for a high-ticket product/service, you need to have a high budget.

You cannot get $10K worth of sale (single product or service price) with with $10-15 budget.

So my take is that check what's your product/service price and your target audience's frequency to buy that product/service. Then Set 5 times to that price as your target budget to spend to see if ads are working for you or not.

But this is not no always the case, Low-priced products/services get sales early with even low budget. But sales don't mean that your ROAS is also good (that's another point). So you need to keep an eye on that. Here are some of the examples to decide (only for your understanding):

Example 1: Product Price (E-Com): $25

Estimated budget: $200-400 for testing because you'll get sales easily.

Example 2: Service Price: $100

In order to test that, you need to have $500 for testing that.

Example 3: Product/Service: $10,000+

Now it will purely depend on your funnel because people will not purchase high-cost products at once. We need to have multiple touchpoints and what kind of campaigns you are running. Split this into micro conversions and check the cost for each micro conversion. Then set your KPIs to get those micro conversions and then set your budget.

Nobody, literally nobody can tell you what budget is good for your ads. You need to be strategic to think about these and then set your budget.

One important thing is that, don't panic if sales are not coming initially. You need to split your conversion path and check audience interaction on each path. Then check if you or your ads manager are spending budget-wise or wasting your budget.